NJ Division of Taxation Voluntary Disclosure for Out of State Businesses with Click-Through Nexus

The New Jersey Division of Taxation recently announced a special voluntary disclosure program for out of state businesses that have click-through nexus.  The program will run from August 21, 2017 through November 21, 2017.

New Jersey’s click through nexus was enacted July 1, 2014, N.J.S.A. 54:32B-2(i)(1) creates a rebuttable presumption that an out-of-State seller who makes taxable sales of tangible personal property, specified digital products, or services, is soliciting business and has nexus in New Jersey if that seller meets the following conditions:

  • The seller enters into an agreement with a New Jersey independent contractor or other representative for compensation in exchange for referring customers via a link on their website, or otherwise, to that out-of-State seller; and the seller has sales from these referrals to customers in New Jersey in excess of $10,000 for the prior four quarterly periods ending on the last day of March, June, September, and December.

An out-of-State seller that meets both of these conditions is presumed to be soliciting business and has nexus with New Jersey.

The out-of-State seller must register for sales tax purposes and collect and remit sales tax on all sales delivered to New Jersey. The voluntary disclosure program is for out of state businesses that meet the requirements set forth in N.J.S.A. 54:32B-2(i)(1).  Under the special program, businesses can enter into the voluntary disclosure program and become compliant with the registration and reporting requirements.  Under the terms of the program, the taxpayer cannot have previously been contacted by the Division about sales and use tax compliance.

If the taxpayer is accepted into the program, it must file any required returns for the two quarters between January 1, 2017, and June 30, 2017; all prior periods will be considered closed. The Division will waive all penalties, but statutory interest (prime rate plus 3 percent as applicable to each period at issue) will be applied. Within 45 days of executing an agreement with the Division, taxpayers will be required to register with the Division of Revenue and Enterprise Services using New Jersey Business Code “O/S SELLER 5000.” Participating sellers will then electronically file quarterly sales and use tax returns, report all sales subject to New Jersey sales tax, and remit payment of the tax due for the required periods. The statutory interest owed must be paid within 30 days of filing the sales and use tax returns.

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